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Wednesday, May 3rd, 2017

The conditions that help poor people make better decisions, according to new research

Author:     Jon M. Jachimowicz, Elke U. Weber, and Jaideep Prabhu
Source:     Quartz
Publication Date:     May 02, 2017
 Link: The conditions that help poor people make better decisions, according to new research
Stephan:   Social outcome data shows us how to end poverty. But to enact it requires thinking of the world in another way; one which makes wellbeing the goal. Here is a report of the kind of data I mean. We know what works. That's not the issue. The Theorem of Wellbeing is very clear. As this report illustrates wellness is more efficient, more effective, more productive, easier to implement, nicer to live under and, cheaper.

Credit: Reuters/Mohammad Ponir Hossain

One of the keys to success in life is learning to forego instant gratification for long-term rewards. When we stay home to work on a college essay instead of going out with our friends, or put money toward retirement savings when we could spend it on clothing and fancy meals out, we are betting that the long-term payoff will be worth the short-term sacrifice.

Troublingly, research has shown that low-income people are more likely to make short-term decisions—like borrowing at excessive rates—that make them worse-off in the long run. A 2012 study, published in Science magazine, explains that this kind of decision-making is the direct result of poverty. When we have limited resources, our brains adopt a “scarcity mindset.” All our attention is directed to figuring out how to make rent or buy enough groceries to get through the week, which means that we have a harder time making decisions that involve long-term thinking. This it even harder for people to escape the cycle of poverty.

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